The owners of a high-profile marijuana shop in Southern California – Santa Ana’s 420 Central – are accused in a lawsuit of defrauding investors.
The suit, filed in Orange County Superior Court of California, contains a host of salacious allegations, including one that founder and CEO Robert Taft ran an unlicensed marijuana grow operation in Sonoma County.
The suit, filed by two investment companies against a conglomeration of business entities known collectively as the 420 Companies and two of its executives, Jorge Burtin and Jeff Holcomb, alleges, among other things:
- Breach of contract.
- Breach of fiduciary duty.
The lawsuit paints a picture of managerial incompetence at 420 Companies, alleging that Taft is a “mercurial and volatile” executive prone to “boasting about his grand ideas to employees, and coaxing employees to smoke marijuana with him outside during working hours.”
Under Taft’s watch, the suit alleges, 420 Companies has gone into a “death spiral,” hemorrhaging revenues and losing clients.
The suit also alleges the defendants turned down a buyout offer from multistate operator Acreage Holdings for $75 million without first consulting investors. The defendants rejected the offer because they believed the asset is “worth considerably more,” according to the complaint.
The suit requests:
- Minimum damages of at least $11 million.
- The dissolution of 420 Companies.
- A preliminary injunction against the defendants.
- The appointment of a court receiver to oversee 420 Companies’ management.
Taft, who has become something of a crusader against companies that profit from both the legal and illegal cannabis markets, did not immediately respond to a request for comment.
To read the lawsuit, click here.
John Schroyer can be reached at [email protected]